Cow-calf producers may be waiting for higher prices before they sell calves, but that could take a while.
Andrew Griffith, Extension ag economist with the University of Tennessee, says local steer and heifer prices are mostly $4 to $8 lower than a week ago. Cull cow and bull prices are $2 to $3 lower.
“It would appear that cow-calf producers are slow to start bringing spring-born calves to market, but it will not take long before local auctions are overrun with calves that are ‘weaned on diesel,’” Griffith says in his weekly market outlook.
“The most pressing issue from a marketing standpoint comes from the expectation that calf prices will continue to soften from now through November.”
Griffith says the combination of low prices and forage concerns in parts of the country has producers scrambling to make decisions.
“This is not a doom-and-gloom analysis, as both are already present in the marketplace. This is meant to convey the message that the market is poor and there is no near-term improvement in sight with the fall marketing rush around the corner.”
Griffith says stocker and backgrounding operations need to pay less for fall calves due to the high risk of health issues during that time of year. He adds this is why many are hoping to buy preconditioned calves during the fall.
“Buyers of cattle are generally looking for calves that walk off the trailer and start eating, but this behavior is not typical of freshly weaned calves that spend a few days walking fences,” Griffith says. “The available marketing alternatives become fewer the longer a person waits to make a decision. Not only do alternatives become fewer, but the check often gets smaller.”
Fed cattle prices continued to fall last week, with the 5-area weighted average prices thru
Sept. 12 dropping below $100 per hundredweight on a live basis. A year ago, prices were in the $108 range.
Griffith says there are signals heavier cattle may be heading to market.
“Cattle feeders have been willing sellers of fat cattle most of the year, but the market is beginning to send signals that may derail the marketing schedule and result in heavier cattle being marketed,” he says.
Deferred contract months are trading at a premium compared to the October contract, Griffith says, giving feedlots an incentive to add weight before marketing.